I remember running away from a creature or a city guard and to save myself a few moments of breathing I spoke with a NPC, while speaking in mid-air (I jumped at that moment) I spoke with him about rumors, the family, the kids and his job (you get the picture).
Now, to make myself clearer: I'm not at all talking about the fact that I was able to pause the game as for I already know that won't be in the game anymore, now the conversations are real time and I all for it.
My point is, a guard is chasing me and yet the NPC still feels like he can speak a normal conversation with me instead of saying "Get away from me you criminal!"
I hope NPCs don't react to Dragon attack on cities with continuing their normal duties and only the guards fight the dragons...
In short, I just want NPCs to react to what's going on, and if a wolf chases after me, help, cry for help, or yell with a scare instead of saying "Good morning".

Lolz

"Hail Dragonborn! How goes it? And were you aware there is a ravenous beast at your heels?"

Its possible we'll get the "Character X is fleeing" pop up whenever trying to talk to someone while we're in danger. That would work well enough for me, along with maybe a scream if we run past with guards...or something bigger, on our heals.

I actually hope other guards will try to stop you from running like make a human blockade or something. Similar as you see in ACB

Other then that, i just want the people around to step back point/etc give them some gossip afterwards.

Bystander effect plays should play a major role..

Yeah, question is what happens when you talk to them? Do they say "Stay back!" or ignore you, or do they just say "Hail friend!"?

What game were you playing? NPCs ALWAYS reacted when hostile creatures were nearby, by doing one of those things. At least, they did for me. Maybe they didn't like you.

Regardless, this is something that is pretty much guaranteed. New engine, enhanced AI.

:D

Well if I remember well there already confirmed thats NPC react on Dragon Attacks,
dialogues now real time and activating an NPC twice will mean 'Ask More...' dialogue option so dialogue can be overridden by NPC AI behavior at thats moment, so NPC can avoid dialogue initialization with player and other NPC.
So maybe there will nor more 'Mudcrabs NASTY creatures' conversation while Daedra invasion like it was in Oblivion, but from other side NPC can break important conversation with player while danger is around or worse forced to continue it while enemy strike him from back while dialogue with player.